Deutsche Bank | There has been no significant progress in negotiations with Pratt & Whitney since the publication of Airbus’s (AIR) results. In October/November 2025, Pratt & Whitney began to backtrack on its previous commitment to deliver a certain number of engines to Airbus in 2026. Presumably, this was due to a higher-than-expected level of AOGs (aircraft on the ground). Airbus’s delivery forecast for the 2026 financial year, of around 870 aircraft, is now based on the updated volume of engines that Pratt committed to supplying prior to the publication of the 2025 financial year results. Without the issues with Pratt, the forecast would have been higher. The company was not overly optimistic about exceeding its delivery forecast for the 2026 financial year. Airbus could seek financial compensation from Pratt.
Although the relationship with Pratt & Whitney is strained, there is no alternative for the time being. Airbus’s contracts provide a legal basis for compensation. However, competition and the arrival of new entrants to the narrow-body aircraft engine market could give Airbus a certain advantage in the future, especially now that the company is considering capturing a larger share of the engine market and could revise contracts to better balance the risks and profit-sharing between the original equipment manufacturer and the engine manufacturers. Airbus’s strategy is not to become a player in the maintenance, repair and overhaul (MRO) sector, but to secure a larger share of the aftermarket revenue it helps to generate.
Recommendation: Buy; Target Price €226 per share.
